Australian economy grew 0.2% in December quarter, 1.5% in 2023
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The news: Australia's economy grew just 0.2% during the December 2023 quarter, and 1.5% for the year.
The numbers: The small GDP rise in the December quarter, lower than estimates of 0.3%, was driven by government spending and private business investment.
Government spending included benefits for households, with more spending on medical products and services and higher employee expenses across commonwealth departments.
Private business investment grew 0.7%, driven by non-dwelling construction for data centres and warehouses.
Net trade contributed 0.6 percentage points to the quarter’s GDP growth as imports fell 3.4%.
Household spending rose 0.1% during the quarter due to increases across all essential categories but lower spending in discretionary areas.
Employee wages rose 1.4% during the period and 8.4% during 2023. Public sector wages, up 3.3%, drove the increase due to new bargaining agreements, more employees and the Voice referendum.
The increase in wages and government payments boosted the household saving to income ratio to 3.2%.
The context: After 13 interest rate rises since May 2022, the country has lived through the weakest year for economic growth in decades (apart from during the Covid pandemic) as the cost-of-living crisis continues to impact households.
However, the muted figures could bolster calls for the Reserve Bank of Australia to lower interest rates later this year. Last month, the RBA left rates unchanged and said an interest rate rise had not been ruled out.
What they said: ABS head of national accounts Katherine Keenan said: “Growth was steady in December, but slowed across each quarter in 2023”.
“Government spending and private business investment were the main drivers of GDP growth this quarter,” she said.
The source: ABS release
